OptionPundit

Tag: USB

  • American Express Beats on Earnings (AXP)

    American Express, AXP posted third quarter earnings of $0.74 per share, which is $0.15 better than consensus estimate of $0.59 per share. The company’s revenue totaled $7.16 billion vs. analysts’s estimates of $7.31 billion in revenue. Consolidated provisions for losses totaled $1.4 billion, up 51% from a year ago. The third quarter net loan write-off rate in the U.S. Card Services segment was 5.9%, up from 5.3% in the second quarter.

    The company believes consumer and business sentiment is likely to deteriorate further, translating into weaker economies around the globe well into 2009. Cardmember spending is likely to remain soft. Loan growth will be restrained partly because of company efforts to reduce credit risks.

    The shares were up in the after market hours trading. This was also a bullish pick for OPNewsletter. We’ll see how it performs when market opens. Albeit, Moody’s Investors Service lowered the long-term senior ratings of American Express Co. (Amex) to ‘A2’ from ‘A1’, citing negative asset quality trends and lending exposures, particularly within geographic markets in the United States that have experienced sharp home price declines. According to the report, about $75 billion of debt securities are affected by the action. The rating outlook is negative.

    On the other hand Texas instruments (TXN) missed on both revenue as well as earning’s estimates. To make matter worse, TXN has also lowered the guidance. The week is packed with action, we have lot of companies announcing results including Caterpillar (CAT), Coach (COH), Manpower (MAN), Pfizer (PFE) and US Bankcorp (USB) to name a few that are going to set the tone for market action today.

    Profitable trading, OP

  • Two Days is What it Takes

    Only two days is what it took to erase nearly a month’s gain. We are almost at the same place where we were on April 17th. The picture is not rosy and every main stream media has just turned bearish. What has changed in just two days? A lot but nothing that was not known. CPI and PPI are useless as lot can be hidden behind the numbers. I won’t talk about that here as many more fellow bloggers are writing much better. Both S&P500 and Dow kissed 200Days MA and seems like saying bye bye. Both have dropped below their support level that I have been watching and mentioning for long time.

    So what’s next, change in strategy! Change for a bearish bias unless both Dow and S&P crosses the key levels. I will be cautious here.

    UBS is offering a hefty 31% discount to raise $15.6Billions. Sorry SWFs. You may turn out to be smart in future but not anytime soon. It’s going to be very rough ride. Oil is kissing $135, I wonder what Dr Irwin and credit suisse has to say about this meteoric rise in oil prices. According to NewYork times, American airlines (AMR) is forced to charge $15/bag, it will eliminate 11-12% of seats, it will retire 85 aircraft. Not good, spells for stagflation, the worst enemy of markets per se. Embrace the change and start to love it, that’s the recipe to survive. There is no other secret.

    The fact is that world’s landscape is changing, slowly but truly and it’s changing big time. There is a whole new population coming on-board that wants to make decision and drive change. Get ready for it. A simple investment philosophy- Invest in whatever 1/3 of rising prosperous population needs. No detailed reports, no P/E, no DCF modeling and no consultation to highly paid investment advisers. There will be ups-n-down along the way, but I do think “That’s the way”…just simple basic needs.

    Has the market already discounted the bad news, my bias is “yes” unless some other big surprises are in the store. Collective wisdom at the market knows that inflation is running high, no matter what government statistics tells you. They know earnings are going to be bad. Nothing is a surprise. What I am not seeing though is the buying activity. Volumes are generally larger on the down days than it is on the up days. Both Dow and S&P500 had tough time to comfortable sit above 500/200 days averages. All the morning gains disappear by the afternoon. I interpret it this way that institutional money is on the sidelines.

    Where are we going then, your guess is probably better than mine and that’s why I would like to be protected on either side, as much as possible.

    Have fun and prepare for a different tomorrow,

    Profitable trading, OP